Travelers 2005 Annual Report Download - page 157

THE ST. PAUL TRAVELERS COMPANIES, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
145
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont inued)
Net written premiums by market were as follows:
(for the year ended December 31, in millions) 2005 2004 2003
Bond.............................................. $1,267 $1,183 $ 781
Construction ....................................... 916 844 474
Financial andProfessional Services. ................... 850 636 —
Domestic Specialty Other............................ 1,605 1,186 —
Total Domestic Specialty .......................... 4,638 3,849 1,255
International Specialty............................... 1,091 922 3
Total Specialty ................................... $5,729 $4,771 $ 1 ,258
Personal
Personal writes virtually all types of property and casualty insurance covering personal risks. The
primary coverages in Personal are automobile and homeowners insurance sold to individuals. These
products are distributed through independent agents, sponsoring organizations such as employee and
affinity groups, and joint marketing arrangements with other insurers.
Automobile policies provide coverage for liability to others for both bodily injury and property
damage, and for physical damage to an insured’s own vehicle from collision and various other perils. In
addition, many states require policies to provide first-party personal injury protection, frequently referred
to as no-fault coverage.
Homeowners policies are available for dwellings, condominiums, mobile homes and rental property
contents. Protection against losses to dwellings and contents from a wide variety of perils is included in
these policies, as well as coverage for liability arising from ownership or occupancy.
Net written premiums by product line were as follows:
(for the year ended December 31, in millions) 2005 2004 2003
Automobile ........................................ $3,477 $3,433 $ 3 ,054
Homeowners and other.............................. 2,751 2,496 2,027
Total Personal.................................... $6,228 $5,929 $ 5 ,081
Catastrophe Exposure
The Company has geographic exposure to catastrophe losses in certain areas of the country.
Catastrophes can be caused by various natural and man-made events including hurricanes, windstorms,
earthquakes, hail, severe winter weather, explosions and fires. The incidence and severity of catastrophes
are inherently unpredictable. The extentof losses from a catastrophe is a function of both the total amount
of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are
restricted to small geographic areas; however, hurricanes and earthquakes may produce significant damage
in larger areas, especially those that are heavily populated. The Company generally seeks to reduce its
exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance.
There are risks which impact the estimation of ultimate costs for catastrophes. For example, the
estimation of reserves related to hurricanes can be affected by the inability of the Company and its